Rmb Exchange Rate Movements On The Analysis Of The Impact Of China's Trade Balance

Exchange rate is simply the price of one currency in terms of another. As an essential constituent part of price system, exchange rate will exert important influences on a county's foreign trade because its fluctuation can change the comparative price of import and export goods.Before china's reform and opening, all the export and import trade are controlled by the government .RMB exchange rate had nothing to do with china's foreign trade for a long time and couldn't adjust the trade balance.After the reform and opening policy's implementation, RMB exchange rate has become more and more important to china's foreign trade with the foreign trade and foreign exchange system's reform. The depreciation of RMB has promoted china's export trade and improved china's trade balance.This paper analyzed the effect of the changes of RMB exchange rate on china's trade balance by using the qualitative and quantitative analysis. The result of the analysis is that it is in the short run not in the long run that the depreciated RMB did play an important role in scale-up export and improved the trade balance .At the same time, the effect of RMB exchange rate on the trade balance is conditional, depending on the national economic circumstances and international trade environment. In the long term, only by adjusting the domestic industry structure and trade structure can we realize the substantial development of our country's foreign trade.